New Zealand has 85,000 young people not in education, training or work - 18,000 more than when National took office, according to Labour Party figures. Photo / Christine Cornege

John Key was personally shocked by news that unemployment has ratcheted up to 7.3 per cent.

It was writ large on the Prime Minister's face when he stopped for an informal chat at a conference in Auckland on Thursday.

The dreadful news was clearly counter to the advice the Government has received from the Treasury.

But instead of galvanising Key into action - through orchestrating a real Jobs Summit and incentivising employers to take on more workers - the Prime Minister waffled.

Labour youth affairs spokeswoman Megan Woods was more compelling when she said New Zealand was facing a youth job crisis with one in four young people unemployed.

"There are no jobs for them. There are 85,000 young people not in education, training or work in this country.

That has increased by 18,000 since National took office."

For Key to simply shrug his shoulders on this score doesn't cut it.

If he was gazumped by the awful statistics, so too were the nation's economists when official figures confirmed the unemployment rate was the highest it has been since June 1999. "A true shocker," said Westpac.

Fundamentally you would have to wonder if they have all had their eyes wide shut in recent months while export-orientated companies have cut heaps of jobs in response to more difficult environments overseas.

Auckland Mayor Len Brown was also blindsided. Earlier this week Brown had rejoiced over June quarter figures which showed the percentage of youth unemployed in Auckland had dropped from 33 per cent to 27.6 per cent over the past year.

He highlighted this improvement in his mayoral scorecard, predicting the situation for Auckland's young people would improve as economic growth returned. But that now looks a big ask when the latest figures show overall employment has fallen by 2.1 per cent in Auckland.

Key - and the economists who have been caught short by the official statistics - will be hoping the September outturn in the Household Labour Force Survey is a statistical aberration. Westpac has pointed out the survey has a history of throwing up "wild false signals".

The Reserve Bank was also caught out by the September quarter figures. The central bank has been urged to slash interest rates further in the hope this will depress the value of the NZ dollar, boost export competitiveness and spark firms to hire more workers.

Irrespective of whether there has been a statistical blip, the blunt reality is the situation is not that simplistic.

We are lucky Australia has been a safety valve for Kiwis on the jobs front. But the Australian economy has faced significant economic pressure since China pegged back its order book for hard commodities. There is a risk this will now result in New Zealanders finding it more difficult to get jobs across the Tasman.

The United States also faces tough choices with the Congressional Budget Office advising the American economy will shrink by 0.5 per cent if the federal deficit is slashed through a mix of tax rises and spending cuts.

China's inventory books are overfull, according to Japanese manufacturers I talked with this week. They too worry about the impact on their businesses if China doesn't resume spending at previous levels.

It is four years since the global financial crisis exposed several of our over-leveraged companies as relative basket cases. Some survivors among the externally focused companies can no longer withstand the effects of a high dollar on revenues. They have had to trim staff to stay in business.

The Government ignored the move by opposition parties to launch an "inquiry" into problems the manufacturing sector has faced. Of course the opposition parties were politicking.

But that doesn't mean the Government should not face up to the worrying concerns itself.

For months we've heard how the Canterbury rebuild would be the major economic growth kicker for New Zealand.

The statistics show growth is indeed occurring in Christchurch.

But faith is no excuse for a failure to act. It's time, surely, for Key to call an economic summit to address the issues New Zealand faces.

We owe it to the young people who are yet to even get on the employment ladder to be less ostrich-like as a nation.

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.